Since taking a controlling ownership in Sprint, Japanese telecom company SoftBank has made no attempt to hide the lust it has in its heart for fellow wireless company T-Mobile USA. Since then, federal regulators have basically told SoftBank to put its ardor on ice because there is already too little competition in the wireless market. But SoftBank may have a trick up its sleeve, coming at the deal through the lens of a market that is even less competitive — broadband.
Bloomberg reports that SoftBank CEO Masayoshi Son will be in Washington, D.C., this week to put his revised sales pitch before regulators at the FCC and the Justice Dept.
Son had previously tried to woo regulators by reportedly claiming that the only way for Sprint and T-Mobile to compete with the much larger AT&T and Verizon is for the two smaller businesses to merge.
The new tactic is to convince folks in D.C. that a combined Sprint/T-Mobile could provide a viable competitive alternative to broadband services.
As we recently highlighted, many cities across America have little to no competition for residential broadband service. Even those cities where there are multiple companies involved, there is sometimes no overlap.
“In most markets you have one or two choices for broadband. SoftBank’s strategy is to convince the FCC and DOJ that a strengthened No. 3 player can compete with cable,” a Wells Fargo analyst explains to Bloomberg. “The key to this will be finding a way to make it politically palatable so it doesn’t look like regulators are doing an about-face on the four-player market preference.”
There are those who believe that the future of broadband is not fiber-to-the home but some form of wireless data delivery that can provide data speeds most customers need for Internet use and streaming video/music/games without the hassle of creating a wired network that connects to each end user.
It’s inevitable that such service will someday be commonplace, but the question is whether it will be the cable companies, the wireless providers, or some third party like Google, that will be the ones to make it a reality.
Given Sprint and T-Mobile’s comparatively sluggish rollout of LTE, we have a hard time believing that SoftBank will be able to convince regulators that these are the two companies that will successfully compete against the Comcasts of the world.